Cross-border trucking: Debate heats up on anniversary of tariffs

The wrangling over opening the U.S.-Mexico border to long-haul trucking operations is picking up steam as the one-year anniversary of the end of the Bush administration’s pilot program nears.

The Federal Motor Carrier Safety Administration pulled the plug March 11, 2009, on a pilot program that had allowed Mexico-based motor carriers long-haul access to the U.S.

The highly contentious program lost its funding when President Barack Obama signed the 2009 transportation appropriations bill into law on March 10, 2009. The next day, FMCSA started the process of shutting down the program.

One week later, Mexico struck back hard implementing tariffs on some 90 U.S. goods – tariffs carrying a price tag of approximately $2.3 to $2.4 billion.

Mexico officials claimed to have imposed the tariffs because ending the cross-border program would cost Mexico potentially up to $2 billion.

U.S. lawmakers called foul on Mexico’s tariffs, claiming the tariffs were everything from “inappropriate” to downright “illegal.”

The U.S. agency charged with resolving just such disputes is the Office of the U.S. Trade Representative. U.S. Trade Representative Ron Kirk and the entire Obama administration were repeatedly called on by lawmakers to look into the tariffs and take action.

Rep. Peter DeFazio, a Democrat from Oregon and a vocal opponent of the program, sent a letter to President Barack Obama urging him to take action against Mexico’s “illegal” tariffs.

In a press release issued by his office on March 20, 2009, DeFazio pointed out that several of the tariffs were aimed at products produced in DeFazio’s home state and the home states of various other lawmakers who actively sought to shut down the program.

“These tariffs are illegal and should be treated as nothing more than political gamesmanship. Mexico has no legal grounds to implement any of these tariffs. Even if there was a legal basis for the tariffs, the $2.4 billion price tag is a disproportionate response, and the 90 U.S. products targeted for tariffs were illegally selected,” DeFazio wrote in his letter to Obama.

Rep. Brad Sherman, D-CA, wrote a letter to Kirk asking what actions his office would be taking to rectify these lopsided, “inappropriate” tariffs imposed by Mexico.

Sherman pointed out that the North American Free Trade Agreement limits maximum “sanctions” to pre-NAFTA levels. The tariffs imposed, according to research collected by Sherman from groups such as Public Citizen, would generate nearly $427 million in revenue.

However, he pointed out, Mexico’s losses because of the conclusion of the cross-border program were actually somewhere between $69 million to $227.6 million.

“That is to say that Mexico’s real losses are 16 to 53 percent of what is being imposed,” Sherman wrote to Kirk.

“It has been nearly three months since Mexico slapped these sanctions against U.S. trade. If Mexico has imposed tariffs that greatly exceed the actual damages in this matter, I would assume that the USTR is working to seek immediate relief for U.S. producers,” Sherman wrote.

Now 11 months into the tariffs, Kirk has not taken any action.

“The USTR seems to be more interested in placating the Mexican government than in standing up for U.S. jobs and American small businesses,” said Todd Spencer, OOIDA executive vice president. “Who the hell does he think he works for?”

Rather, the trade representative has repeatedly indicated that the simplest way to get the tariffs dropped is to simply initiate another cross-border program. He’s even gone so far as to indicate that congressional limitations on cross-border programs had been eliminated.

Recently, following a meeting with Mexican trade officials, Kirk said that the prohibition on cross-border trucking had been “removed” from the 2010 transportation appropriations bill.

Yet, clearly, there remains language in Section 135 of the 2010 appropriations bill that puts numerous restrictions on any cross-border program between the U.S. and Mexico.

The section reads:

“Sec. 135. Funds appropriated or limited in this Act shall be subject to the terms and conditions stipulated in section 350 of Public Law 107-87 and section 6901 of Public Law 110-28, including that the Secretary submit a report to the House and Senate Appropriations Committees annually on the safety and security of transportation into the United States by Mexico-domiciled motor carriers.”

Between Section 350 and Section 6901, the laundry list of safety and regulatory compliance items that Mexico has yet to address is lengthy, to say the least.

There has been little in the way of information from FMCSA or Mexican officials as to what strides Mexico has made to comply with the limitations – like comparable drug and alcohol testing, CDL licensing and tracking, etc.

On March 18 of this year, the existing tariffs will expire. And, in addition to lack of information on Mexico’s intent to comply with the outlined check-off points for a cross-border program, there has been no indication from Kirk or the Mexican government that the expiration of the current tariffs will mark the end of Mexico’s retaliation to the end of the cross-border program.

“The safety and security issues haven’t been resolved, and they certainly haven’t gotten better in the past year. Those are the issues that officials from Mexico should be focused on, and our U.S. trade rep should not be bashful about telling it exactly that way,” Spencer said.